Overpopulated SEC

CHAIRPERSON Teresita Herbosa of the Securities and Exchange Commission (SEC) may not be the only overpaid but underworked member of the five-person regulatory body in 2015. Like her, the four other SEC commissioners have also become redundant but are among the government’s highest-paid officials.

This conclusion—mine—is based on the findings of the Commission on Audit (COA), the government’s financial watchdog.

In its audit report for 2015, COA said the four SEC commissioners were paid a total of P26,124,684 in 2015, or P6,531,171 each. Their basic salaries totaled P19,132,848, a huge amount that entitles each of them to P4,783,212. The beneficiaries of the government’s generosity, according to the COA report, were Commissioners Ephyro Luis Barios Amatong, Manuel Huberto Badilla Gaite, Antonieta Fortuna Ibe and Blas James Gregorio Viterbo.

(Note: I have been using a five-person SEC regulatory body whose members are all commissioners. The chairman is appointed by the President. This is unlike listed companies where members of the board elect the chairman or chairperson, except of course the government-controlled Philippine National Construction Corp., which has been converted into a “subsidiary of the Office of the President” during the previous regime of the former casual occupant of Malacañang.)

403.6% increase
Compare the pays and perks of the four commissioners with their predecessors and decide for yourself whether they deserve the increases over the years. If ex-SEC chairperson Fe Barin’s co-commissioners received P5,187,531, or P1,296,882 each in 2009 (2009 total of P7,851,956 minus Barin’s P2,664,425 = P5,187,531), their successors were paid much more.

A computation shows that the basic pays and incentives of Amatong, Gaite, Ibe and Viterbo surged 403.605 percent to P26,124,684 or P6,531,171 each in 2015, from P5,187,531 or P1,296,883 that each of their predecessors was paid in 2009.

Another method of computation is to divide P26,124,684 by P5,187,531, and you get 5.036, which means the total compensation of the SEC’s four commissioners under Herbosa grew more than five times the amount Barin’s four commissioners were paid in 2009.

Unjustified compensation
Is the SEC being very generous to the members of its regulatory body that it would probably continue to overpay them for less work? Why were Herbosa and company paid close to P40 million when 14 of the SEC’s judicial functions have been placed under jurisdiction of regular courts since 2001?

Definitely, these questions will remain unanswered by SEC insiders. How about asking the former temporary residents of Malacañang who among them were responsible for the government’s generosity to Herbosa and company?

Only the former occupants of the Palace would be able to explain why the government has been spending a lot of people’s money in maintaining the SEC’s five top officials who today have less responsibility than their predecessors before the amended Securities Regulation Code took effect in June 2001.

For instance, SEC Chairman Julio Sulit used to receive gross compensation of about P35,000 a month while the four commissioners were paid even much less, like P25,000 or may be a little bit more, a month. That was at a time when the SEC still handled intra-corporate cases that, in contrast to my description of Herbosa and company, made them overworked but underpaid government officials.

Listed but not public
As I have been writing either about or against the SEC in the past, I have to disclose that my intention is only for the government to realize that a five-person commission is no longer needed to regulate the stock market.

The commission proper needs only a maximum of three members but can even function efficiently even with only an executive director and two commissioners. (I will expound on this in another Due Diligencer.)

As a matter of fact, Congress missed the chance to reduce the members of the five-person commission when it amended or passed the Securities Regulation Code. Its members have even been kind to the SEC by not defining the agency’s regulatory functions over private or family-owned and controlled corporations whose shares are not listed on the Philippine Stock Exchange.

Instead of focusing on these stock corporations for alleged violations of reportorial requirements such as submission of audited annual reports, the SEC should concentrate on strictly monitoring the so-called listed companies but which are not at the same time public.

Lost among the five SEC commissioners is the reason family-owned stock corporations list their shares, which is to save on taxes when issuing more shares to themselves without premium per share, but charge outsiders more per share.